Hci Group, Inc. · NYSE:HCI
Hci — Q1 2024 Earnings Presentation
30 slides from Hci's earnings presentation, May 8, 2024
Slide 1: Investor Presentation
Investor Presentation NYSE: HCI | M AY 2 0 2 4
Slide 2: Forward-Looking Statement
This presentation includes certain forward‐looking statements and information, including statements regarding plans, strategies and expectations of HCI Group, Inc. (“HCI” or the “Company”). When used in this presentation, words such as “believes,” “anticipates,” “expects,” “estimates,” Forward-Looki
Slide 3: HCI at a Glance
Stock Price2 $103.78 Est. Market Capitalization2 $1.1B Property & Casualty Insurance Insurance Technology Price-to-TTM Earnings 10.6x Book Value/Share $38.50 HCI at a Glance Dividend Yield2 1.5% In-Force Premium3 $1,069M Debt to Capital 37% Founded/IPO 2006/2008 Reinsurance Real Estate Management Te
Slide 4: Investment Thesis
Investment Thesis An insurance holding company with operations in Homeowners Insurance, Information Technology Services, Reinsurance, and Real Estate 2006 founded Combining technology and industry knowledge to drive profitable growth consecutive quarters Allocating capital with purpose and disciplin
Slide 5: Growing Through Investment & Innovation
Growing Through HCI transitions polices HCI Group premium in 4 Northeast states in force exceeds Investment & Innovation from UIHC $700 million HCI transitions all TypTap approved policies from Anchor in 20 states Insurance TypTap insurance group raises Executed Launched Launched $100M in capital fi
Slide 6: Overview of HCI Business Divisions
Overview of HCI Business Divisions PROPERTY & CASUALTY INSURANCE TECHNOLOGY RECIPROCAL EXCHANGE REINSURANCE Homeowners and Technology-driven Writing Florida-based Provides Reinsurance Flexibility condominium insurance homeowners insurance commercial residential lines primarily in Florida Nationwide
Slide 7: A Growing Homeowners Business
A Growing Homeowners Business Premium in Force (in $M) Loss Ratio 2 The loss ratio has benefited from a 25% $1,069 decline in claims frequency and a 35% $995 41% decline in litigation frequency $719 $737 34% $528 31% $353 $338 $369 3 2017 2018 2019 2020 2021 2022 2023 Q1-24 Q1-22 Q1-23 Q1-24 Premium
Slide 8: Steady Improvement
Steady Improvement Shareholders Equity (in $M) Invested Assets (in $M) $396 $1,271 $325 $1,057 $850 $163 2022 2023 Q1-24 2022 2023 Q1-24 Book Value Per Share Debt Leverage (%) 1 57% $38.50 $33.36 39% 37% $18.91 2022 2023 Q1-24 2022 2023 Q1-24 7 (1) Excludes preferreds
Slide 9: Property & Casualty Insurance
Property & Casualty Insurance 8
Slide 10: Florida Focused Insurance Business with Strong Operating Performance
Florida Focused Insurance Business with Strong Operating Performance Homeowners Choice In-Force Premiums (in $M) 2 $611 $597 $482 $422 1 $378 $323 $309 2018 2019 2020 2021 2022 2023 Q1-24 Best-in-class Opportunistically Proactively Deploying Excess Underwriter in the Acquiring Profitable Managing Ri
Slide 11: Customer Centric Model Delivers High Customer Retention
Customer Centric Model Delivers High Customer Retention Strict underwriting, exposure management, and industry-leading claims technology support risk selection, customer retention and loss control Average non-cat gross loss ratio at approximately 30% >70%(1) of in-force premium retained more than 6
Slide 12: Value-Added Portfolio Acquisitions
Value-Added Portfolio Acquisitions DECEMBER 2021 AUGUST 2021 Has acquired Has selected policies of ~$300M of in-force premiums acquired for $12M, resulting in earnings accretion Georgia, North Carolina & South Carolina Florida insurance policies personal insurance lines $87 million of $3.1 million c
Slide 13: Insurance Technology
Insurance Technology
Slide 14: U.S. Homeowners Insurance is a Massive Opportunity
U.S. Homeowners Insurance is a Massive Opportunity… …with Attractive Features Homeowners market is large and growing Fragmented with one company > 10% share High average premium and strong retention Incumbents under-investing in technology Opportunity to capture market share $149B Total U.S. market
Slide 15: TypTap's Advantages
Purpose-built technology suite 100% owned by TypTap Differentiated data and proprietary analytics TypTap’s creating superior underwriting results Advantages Aggregation of profitable properties is enhanced by high customer retention rate Ease of use for a frictionless policyholder and agent experien
Slide 16: We Use Technology to Underwrite at the Individual Property Level
We Use Technology to Underwrite at the 73%1 Individual Property Level industry average loss ratio TypTap’s Differentiated Strategy Up to 1000 Data Points per Property Individual property level risk evaluation Individual Property Level Risk Selection Only write insurance for homes that are expected t
Slide 17: Individual Level Risk Evaluation Results in TypTap's Lower Loss Ratio
Individual Level Risk Evaluation Results in TypTap’s Lower Loss Ratio RED PROPERTIES (not approved): Risks that we expect Property level to be unprofitable and (TypTap) vs. zip code will not bind level (industry) GREEN PROPERTIES TypTap’s algorithms (approved): Those that meet our return can determi
Slide 18: HCI Developed its Own Technology
HCI Developed its Own Technology Exzeo Was Launched in 2012 to Build and Develop TypTap’s Entire Technology Stack Wholly-owned technology subsidiary Started writing flood Launched policies after Launched A team of over 150 Exzeo Launched Casaclue and 4 years of Launched homeowners National experienc
Slide 19: TypTap is Operating to Maximize Growth AND Profitability
TypTap is Operating to Maximize Growth AND Profitability TypTap Gross Written Premium (in $M) TypTap Insurance Group Loss Ratio2 $392 48% $364M $348M TypTap CAGR: 87% (vs. 8.7% for U.S. homeowners 39% 38% insurance industry)1 $247M $105M $60M $15M 2018 2019 2020 2021 2022 2023 TTM Q1-24 Q1-22 Q1-23
Slide 20: Reinsurance
CLADDAUGH Reinsurance 19
Slide 21: Claddaugh Generating Profits for Our Shareholders
Claddaugh Generating Profits for Our Shareholders Cumulative Net Premium Earned Since 2008 $200 $180 Claddaugh is used to $160 opportunistically manage reinsurance cycles for HCI’s $140 insurance divisions. $120 $100 $80 $60 $40 Since its formation in 2008, $20 Claddaugh has contributed 1 $58M in pr
Slide 22: Real Estate
GREENLEAF CAPITAL Real Estate
Slide 23: Creating Value in Real Estate
Acquire properties with unique value drivers Creating Value in Real Estate Optimize Reinvest or capital harvest Greenleaf Capital owns and structure operates HCI’s growing real estate portfolio. Its holdings include a set of premier commercial assets in rapidly growing Florida. Develop or reposition
Slide 24: Recent Sales Transactions
Generating Gains from our Real Estate Portfolio PROPERTY LOCATION DATE PURCHASED GROSS PROCEEDS2 BOOK VALUE PRE-TAX GAIN1 Recent Sales Transactions Downtown Office Building 2010 $44.0M $7.0M $37.0M Tampa Downtown Office Building 2017 $14.5M $1.1M $13.4M Tampa Grocery Anchored Retail Eustis, FL 2016
Slide 25: Florida Real Estate Portfolio With Embedded Value
Florida Real Estate Portfolio With Embedded Value PROPERTY APPRAISED VALUE (1) BOOK VALUE(3) DEBT ON PROPERTY Office Portfolio $25M $18M $4M OPERATING Anchored Retail 28M 17M $11M Waterfront Specialty Use Portfolio 40M 17M - DEVELOPMENT UNDER Properties Under Development 42M 38M - $135M1 $90M APPRAI
Slide 26: Homeowners Choice Investment Portfolio
Homeowners Choice Investment Portfolio A conservative allocation, positioned for higher rates and opportunistic investments 1% 9% Cash Fixed Income Real Estate & Other Total invested assets1 48% $441 million Short Term Investments 42% Equity Fixed Income Average Duration ~1 year Limited Partnerships
Slide 27: TypTap Investment Portfolio
TypTap Investment Portfolio A conservative allocation, positioned for higher rates and opportunistic investments 1% Cash 26% Fixed Income Real Estate & Other Total invested assets1 $390 million Short Term Investments Equity Fixed Income Average Duration ~1 year 73% Limited Partnerships (1) As of 3/3
Slide 28: Experienced & Focused Leadership Team
Experienced & Focused Leadership Team PARESH PATEL MARK HARMSW ORTH Chairman & Chief Executive Officer Chief Financial Officer, HCI Group ▪ Founder; Chairman since 2007 & CEO since 2011 ▪ CFO since 2017; previously SVP of Finance ▪ Designed HCI’s policy administration systems, leveraging software ▪
Slide 29: Delivering Shareholder Value
Delivering Shareholder Value capital returned to >$430M shareholders since inception2 18% inside ownership >2700% Total Shareholder Return since IPO 10-year average 13% ROE1 1) As of 3/31/2024 2) Includes $269M buybacks and $162M dividends 28
Slide 30: Contact Us
Contact Us I N V E S T O R R E L AT I O N S HCI C O N TA C T G R O U P, I N C . Bill Broomall, CFA 3802 Coconut Palm Drive VP, Investor Relations Tampa, FL 33619 Tel (813) 776-1012 Tel (813) 849-9500 wbroomall@typtap.com www.hcigroup.com contactus@hcigroup.com 29